Buildings and Contents Insurance

Buildings Insurance

Buildings insurance is a legal requirement for homeowners that own freehold property.

A policy should provide funds to rebuild your home in the event of it being totally destroyed or damaged to the point that complete rebuilding is necessary. Some policies only cover market value, so be sure to check. The policy could also cover against damage caused by events beyond your control including:

Storm and flood damage

Burst pipes and other incidents of water leakage

Fire, smoke and explosions

Subsidence

Vandalism or third party damage

The policy could also provide you with alternative accommodation if your home is uninhabitable. Be sure to not simply opt for the cheapest building insurance quote available and think about your needs.

As well as the structure, buildings insurance also covers permanent fixtures and fittings including baths, toilets and fitted kitchens, bedroom cupboards and interior decorations. The test is whether or not the fixture can be removed and taken to a new home, for example fitted cabinets. Policies will also usually cover outbuildings such as garages, greenhouses and garden sheds but might not cover boundary walls, fences, gates, paths, drives and swimming pools. Advice here from an insurance professional can prove invaluable.

For landlords, building insurance is crucial, as it is for all homeowners. For tenants, building insurance is usually covered by the landlord and only contents insurance needs to be considered.

Contents Insurance

Contents insurance gives protection to anything that is not a fixed part of your home, for example your appliances, electronic goods, furniture and clothing. Most home contents insurance policies will even cover the contents of your fridge and freezer. Policies are advisable for homeowners and tenants while landlord contents insurance can be limited if the property is let unfurnished or part furnished.

The cheapest contents insurance available is indemnity insurance, which will replace, for example, a five-year-old carpet with one of the same age. A more expensive option is the ‘new for old’ policy that replaces the old carpet with a brand new one. A broker can assist in filtering policies to find the best one.

Your home contents insurance could also include cover for some items you take away from the home such as bicycles or prams and even the contents of your handbag. Clothing items, watches and mobile phones can also be covered along with sports equipment. The key is to check your policy and never assume that items are covered.

Garden plants are increasingly covered in contents insurance policies – treat your garden as another room and add up the costs of replacements. High value items, such as those more than £1,000 in value, will generally have to be considered separately from your contents policy.

Similarly to building insurance, contents insurance offers protection against various perils including:

Fires

Storms/flooding

Explosions

Theft and vandalism

Policies can also include cover in the event of an injury in your home. Furthermore, some contents insurance policies would also cover you for legal liability if someone were injured in your home due to your negligence or lack of upkeep of the property.

Buildings insurance – types of cover

The most important factor when insuring your property is to cover the full rebuilding cost and not the market value. The land under your house is not under threat from theft, storms and fire and as the land is normally about a third of the total property value it is important to make sure you cover rebuilding costs rather than market value. It can often prove less costly to rebuild your house from scratch than to buy another, as the land it sits on will usually remain unscathed.

Remember, the same type of house in a slightly different area can have a lower market value than another but yet cost just the same to rebuild in the event of a fire, etc. Therefore, cover your house against the rebuilding cost, and not against its market value.

Contents insurance – types of cover

It’s vital to avoid under-insuring the contents of your home. Most policies will ask you to define a ‘sum insured’ – this will be the maximum your insurer will pay out. Under insuring can have drastic consequences because if, for example, the value of the contents of your home is £20,000 and you insure for £10,000 then you will effectively halve the value of your contents. So if you needed a new carpet valued at £2,000, your insurer would only pay £1,000. Be sure to calculate the correct amounts for all of the contents. Advice and consideration here is prudent to ensure correct levels are applied for.

The best way to do this is to create a checklist of absolutely everything you have in and around your home. Be sure to include things you have made as well as anything that has been given to you because these things will need to be replaced too. Try to include an approximate date when the items were bought and include any receipts you might have. It’s a fairly lengthy process but well worth the effort to ensure that the contents are insured properly.

Also remember about the limit insurers could place on individual items, as it could be lower than some of your possessions. If this is the case you have three options:

Negotiate for the full value to be included.

Insure the item separately.

Break the item down into components of lower value where possible, for example: a camera can have a lens, the main body and peripheral equipment insured separately.

Contents insurance – variable options

There are a number of add-on options available in addition to a standard contents insurance policy. These include:

New for old replacement cover – This replaces items with equivalent new versions at today’s prices.

All risks cover – Includes items taken outside your home. These items are usually specified individually, such as jewellery, mobile phones, etc.

Legal cover – This pays for court costs. There are a number of different policies available including:

Compensation for injuries – If you are in an accident that’s not your fault you could claim compensation.

Consumer disputes – Disputes from buying, holding or selling goods.

Disputes with neighbours – Such as new fences, trees blocking light, etc.

Freezer contents cover – Will pay for a fixed amount should the food in your fridge or freezer become inedible.

Sports equipment cover – Such as golf clubs, squash racquets. They will not usually be covered while in use.

Garden equipment cover – Protects against theft from a garden shed.

Additionally, an option to consider is accidental damage cover, which is standard in a lot of policies. This covers against DIY accidents, paint spillages, etc and is available in both building and contents insurance.

Make sure you examine exactly what your insurance policy covers against. All levels of cover should include compensation against theft and fire. However, it could be important to make sure you are covered against storms and flooding, frozen pipes, subsidence and more. Also, if you have extended or plan to extend your property make sure your policy reflects the changes you make.

Buildings & contents insurance combined

There could be discounts available for taking both policies out with the same insurer and it can certainly save some hassle. However, just because an insurer is good for buildings insurance, it does not mean that they will be the best for contents insurance and vice-versa. Be sure to examine all of the options available with a reputable broker.

Advice

We broker buildings and contents insurance policies for our clients, advising and recommending on appropriate plans to match individual circumstances and requirements. We compare all available plans and policies on the market from all providers so that our advice on which plan to choose is well informed. In addition to cost considerations, we carefully factor in metrics such as:

Special Property Features

High Value Items

Excess Terms

Claims Procedure

Financial Strength of the Insurer

Speed of Processing

Optional Ad-Ons – Such as Legal or Garden Cover

Contact us today if you would like advice on Building and Contents Insurance.

Registered in England: 6566662. Registered Office: 20 Little Britain, St Pauls, London, EC1A 7DH. Holder & Combes Ltd. is authorised and regulated by the Financial Conduct Authority - Firm Reference Number 574786.
The Financial Ombudsman Service (FOS) is an agency for arbitrating on unresolved complaints between regulated firms and their clients. Full details of the FOS can be found on its website at www.financial-ombudsman.org.uk.